Inflation, the Rule of 72, and What to Do

Each month, the U.S. Bureau of Labor and Statistics updates inflation numbers by publishing data for the Consumer Price Index, or CPI.

This CPI number, which has been tracked for over a century, was 10 in 1913, 100 in 1983, and as tabulated for March of 2022, stands at 287.5 today.

In the past year, the number is up 8.5%, meaning that a weighted average of the cost of commonly purchased goods and services has risen 8.5% in 12 short months. 

If this pace keeps up, cash we have today will only buy half as much in 8 or 9 years as it does today. That fact is easily estimated using the Rule of 72.

It’s a rule of thumb that lets you easily calculate how long it will take your money to double at a given rate of return. 

The Rule of 72

A little bit of inflation is good for a healthy economy. If consumers can expect prices to rise, they will be more inclined to spend money now rather than waiting for better prices later on.

The Benefit of Inflation

Everyone will have their own unique rate of personal inflation based on what you tend to spend your money on and how your tastes and needs change with time.

The Reality of Inflation

SWIPE UP NOW TO READ MORE